The fruits of economic growth have not benefited everyone uniformly. Some are left behind and some others are not touched by the benefits of economic growth. It is proved globally that the so-called trickle down effect does not work in all the societies and India is no exception to this. There are various reasons for this uneven development in the society. Modern economy is technology driven and not labour-intensive.
– High volume of high quality goods and services are produced with fewer labour hands. In short, the modern economy is not generating much employment and sometimes it displaces and replaces labour with machines and tools. The period of 1999-2000 to 2004-2005 saw rapid economic growth in the country but it has not impacted on the unemployment problem of the country.
– During this period, the unemployment rate remained almost same for rural males and decreased by just one percentage for urban male. On the other hand, unemployment among females increased by one percentage for urban and rural females.
– One-third of the country’s population is still illiterate and a majority are not educated up to the age of 15 yr. Even among the educated, all do not have employable skills of the modern economy. The education system is not tuned to the changing economic scenario. The large agriculture workforce in rural areas is not sustainable with dwindling cultivable land and use of modern methods of cultivation.
– As a result, the rural labour is pushed into cities in search of work but they do not have any employable skills in the urban formal sector often end up doing odd jobs in urban areas.
Urbanization in this country is mainly due to acute poverty in rural areas rather than due to the economic opportunities in urban areas. Further, poverty is not uniformly spread in the country. States like Orissa, Bihar and Madhya Pradesh have high level of poverty and the levels have not come down significantly in the posteconomic reform era. It is therefore that clear while the economic reform did bring in prosperity to the country, the benefits are not evenly distributed and some are even deprived of the benefits. It is also pertinent to understand that some of them are unable to be part of the economic reform and do not have the capacity to participate in the economic development process.
Such groups need government intervention to ensure that they are not left behind in the development process and deprived of the benefits because they do not have the capacity to be part of the global economy. The government needs to develop safety nets for such groups and try to mainstream them in the development process. They need welfare measures in the form of poverty alleviation programmes to ensure that they survive if not prosper in this era of economic reform. Further, the poor are not a homogeneous population and their capacity to survive the economic reform varied from one group of poor to another. Especially, those who are below the poverty line or the poorest among the poor need more government help.